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Stock Market Today: April 5, 2013

After The Close - It was a disappointing day for those long equities. And much like a few recent sessions, the bears were emboldened by a disquieting report on the U.S. economy. Today, the Department of Labor unnerved investors when it released employment figures that showed payroll growth tumbled in March (more below). This comes on the heels of disappointing data on manufacturing and nonmanufacturing activity and consumer confidence in the last fortnight.

Yet at the closing bell, investors could take a bit of solace in the fact that the Dow Jones Industrial Average, the NASDAQ, and the S&P 500 Index were able to rally off of earlier lows. Still, the aforementioned indexes were down 41, 21, and seven points, respectively. When all was said and done, this week was one of the worse five-day stretches for the U.S. equity market in 2013. It should also be noted that it was an even more disappointing week for the small- and mid-cap indexes, which also were modestly lower today.

From a sector perspective, there was notable weakness in the conglomerates, with the stocks of many of the multinational companies, including 3M Company (MMM - Free 3M Stock Report), United Technologies (UTX - Free United Technologies Stock Report), General Electric (GE - Free GE Stock Report), and Siemens AG (SI), finishing the day in negative territory. Other groups that also did not fare well were the financials, consumer staples, healthcare, and energy. The only group among the top-10 sectors to finish in positive territory was the utilities, which often act as a contrary indicator.

Weighing heavily on the market, at least initially, was a dour report on nonfarm payrolls. Specifically, the Department of Labor reported that employment, which had been generally expected to increase by 200,000 in March, rose by a much more pedestrian 88,000. The headline jobs creation figure, which represented the smallest gain in nine months, overshadowed a drop in the unemployment rate (to 7.6%, its lowest level in four years) and an encouraging report on the international trade gap, which narrowed in the month of February. Next week the economic news will be rather light, with the only major data to be issued next Friday in the form of producer prices and retail sales. Investors, though, should note that the minutes from the most recent Federal Open Market Committee meeting will be made public next Wednesday at 2:00 P.M. (EDT).

Meantime, the weak U.S. employment data were also felt overseas, particularly on the Continent, where Germany’s DAX, France’s CAC-40, and Britain’s FTSE-100 were off 2.0%, 1.7%, and 1.5%, respectively. It marked the worst day for European stocks in 2013. The weak U.S. nonfarm payrolls figure spooked investors in Germany, which triggered a breach of chart support for Germany's DAX. In recent weeks, the major European bourses have been under pressure, as the financial woes of Cyprus and the political and economic uncertainty in Italy have unnerved investors.

Looking ahead, with economic news rather light next week, investors will turn their attention to the earnings beat. On that front, the first-quarter earnings season officially kicks off on Monday when aluminum giant Alcoa (AA - Free Alcoa Stock Report) reports its latest quarterly results after the close of trading. Then next Friday we will get results from banking giant JPMorgan Chase (JPM - Free JPMorgan Chase Stock Report). In between the reports from the two Dow-30 components, we will get the latest earnings from Pep Boys (PBY), PriceSmart (PSMT), Bed Bath & Beyond (BBBY), and Family Dollar Stores (FDO). The current sentiment is that the first-quarter earnings season will be respectable, but investors should note that the instances of negative profit revisions have outnumbered cases of positive adjustments leading into the period. - William G. Ferguson

At the time of this article’s writing the author did not have positions in any of the companies mentioned.

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12:30 PM EDT - The stock market opened sharply lower this morning, but has managed to pare its losses to some degree. Hopefully, we will see continued buying in the afternoon, as bargain hunters possibly move into the market. As we pass the noon hour in New York, The Dow Jones Industrial Average is off 116 points (-0.8%); the S&P 500 Index is down 14 points (-0.9%); and the tech-laden NASDAQ, the weakest of the averages, is lower by 36 points (-1.1%). Notably, the smaller-cap names are actually holding up a bit better, as the Russell 2000 is down only six points (-0.6%). Market breadth suggest a more mixed tone to the market, as declining stocks are now outnumbering advancers by just 2 to 1 on the NYSE. These figures were dramatically worse earlier in the session. Nonetheless, all of the market sectors are still in negative territory. Particular weakness can be seen in the technology and financial names. In contrast, the high-yielding utility issues are holding up better than the broader market. Some pockets of strength can also be found in the shares of metals miners. Gold is up almost 1% today, at $1,565 an ounce. Further, the coal issues are up, along with some real estate stocks.

Technically, the S&P 500 Index has likely hit some resistance. In the pullback, the S&P 500 Index tested the 1,540 area this morning, and seems to have some support there, for now. The VIX, which had been as high as 15.65 earlier, has come down to 14.54, suggesting sentiment has likely improved a bit.

The selloff at the open was largely due to a weak economic report. Non-farm payrolls rose by only 88,000 in March, which was much less than had been anticipated. There were 268,000 jobs added in February, also suggesting a weak comparison. The shortfall may have been expected earlier in the week, after we got a poor ADP release, as well as elevated weekly jobless claims. This may be the reason that the market did not sell off more severely this morning. On a brighter note, the nation’s trade gap narrowed to $4.0 billion in February.

In corporate news, Hewlett-Packard (HPQ – Free HP Stock Report) stock is lower on news that the company’s chairman is stepping down. Also in technology, F5 Networks (FFIV) is seeing its stock fall, after the networking company issued weaker-than-expected guidance. The news has likely dragged down other related technology names. - Adam Rosner

At the time of this article’s writing the author did not have positions in any of the companies mentioned.

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10:30 AM EDT - A weak employment report has sent shudders through the canyons of Wall Street this morning. Specifically, after the U.S. Labor Department earlier today reported that the nation had added just 88,000 new jobs last month--less than half the expected increase of 200,000--the market plunged at the opening of trading, and the bulls have not been able, as yet, to mount any counter move of note.

In fact, the weak payroll increase has more than offset a better trade gap figure, a slight decline in the nation's unemployment rate in March, and a pair of upward revisions on the payroll front for January and February.

Now, less than an hour into the trading day, the Dow Jones Industrial Average is off by 150 points; the Standard and Poor's 500 Index is lower by 17 points; and the tech-heavy NASDAQ is in the red to the tune of 46 points. What's more, losses are being seen across the equity various groups, while nearly four stocks are down on the Big Board for every one that is rising; the ratio on the NASDAQ is a bit worse, at five to one. In another worrisome trend, new highs on the Big Board, which had overwhelmed new low in recent weeks, are now barely ahead of them, suggesting further weakness in the market's overall underpinnings.

Clearly, the bulls are on the run this morning; it will be interesting to see if the bulls can orchestrate some buying later on in the trading day, or whether we will have a second, and more dramatic selloff later on today. Stay tuned. - Harvey S. Katz At the time of this article's writing, the author did not have positions in any of the companies mentioned.

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Stocks to Watch from The Survey – Although investors have their attention on today’s disappointing jobs report, there is some corporate news to keep an eye on, as well. F5 Networks (FFIV) stock is plunging in the premarket, after the telecommunications equipment company cut its March-period guidance, due in part to weaker-than-anticipated sales in North America. Moreover, F5’s announcement appears to be pulling down shares of industry peers Cisco Systems (CSCO – Free Cisco Stock Report) and Juniper Networks (JNPR) ahead of the bell. On a brighter note, WD-40 (WDFC) stock is indicating a nicely higher opening this morning, after the maker of multipurpose lubricants reported stronger-than-expected February-quarter financials. Finally, apparel company Hanesbrands (HBI) has initiated a quarterly cash dividend in the amount of $0.20 a share. – Matthew E. Spencer

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.

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Before The Bell - Just when it appeared as though the bears might be on to something, the bulls grabbed the reins of control back on Wall Street, and those perennial optimists pushed the stock market nicely higher yesterday.

In all, the Dow Jones Industrial Average climbed 56 points; the Standard and Poor's 500 Index was better by six points; and the NASDAQ also rose six points, with an even better showing by the last composite held at bay by further losses in Apple (AAPL), with that erstwhile tech darling dropping more than four points on the day.

These modest gains came in spite of an unexpected sharp increase in weekly jobless claims. That disappointing metric, which showed layoffs reaching their highest point since last November, came one day after Automatic Data Processing (ADP) had issued its monthly report detailing that fewer private-sector jobs were created last month than either the month before or the level expected. Those two reports--the ADP issuance and the jobless claims release--were especially scrutinized because they were to be followed this morning by the far more important issuance by the Labor Department on non-farm payrolls and the jobless rate (see below).

However, these reports aside, many on Wall Street again used the latest nominal selloff, which took place earlier this week, to add to their positions on the long side. This has been the pattern almost since the bull market started in 2009. Also, yesterday, the markets over here were lifted by strong gains in Japan's Nikkei, with that index climbing above 13,000 for the first time since 2008. That composite is up nicely again this morning. The impetus for the Nikkei's sudden strength is the adoption of aggressive new monetary stimulus moves by that country's central bank.

However, this morning, the Nikkei is alone in moving notably higher, with stocks in Hong Kong and in the euro zone, for example, generally in retreat. And on these shores, our futures, fearing another disappointing release when the Labor Department issued its monthly data on employment at 8:30 (EDT), was selling off sharply before that report was released. All told, going into that survey's issuance, which had been expected to show a payroll increase of 200,000 and an unchanged jobless rate of 7.7%, the S&P 500 Index futures were off by 10 points and the NASDAQ futures were in the red by some 19 points.

Now, the details of that report have been issued, and they did not make good reading, as the nation added just 88,000 jobs in March, the lowest total since back in June of 2012. As noted, that was less than half the generally forecast increase of 200,000. On the other hand, February's estimated jobs increase was revised higher to show a gain of 268,000 positions. Initially, that increase had been tabulated at 236,000. Also, the jobless rate ticked down from 7.7% to 7.6%. But that may just have been a case of the labor rolls shrinking.

Overall, this report was not the tonic that the bulls had wanted, and just after the data's issuance, the S&P 500 futures had dropped to a loss of 17 points and the NASDAQ plunged to a loss of 27 points, presaging a markedly weaker opening for Wall Street this morning. - Harvey S. Katz

At the time of this article's writing, the author did not have positions in any of the companies mentioned.

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